Costco: Why You're Spending More Than You Are Saving By Buying Bulk

Ever spend a relaxing Sunday afternoon browsing through Costco chatting with their food sampler associates nibbling on all their delicious food for free? Ya, me neither. I do take their food for free. But generally I hesitate for a second and act like I’m contemplating the intricacies of how the sourness of the salsa pairs perfectly with the saltiness of the nacho, say “mmm that taste pretty good” as I am walking away, and then try and find a trash can someplace the food tester person won’t see me throw away the paper cup with the rest of the salsa I couldn’t get on my chip without looking desperate. As if the tester person is going to get offended by my throwing away the cup in the can conveniently right beside their testing table. I think I probably just used a bunch of run on sentences there. Anyhow… on to what I have learned.

We Consume More When We Have More

There is a strange habit of people to use/consume more of an item when there is more of that item to use. Take paper towels as a personal example. When I buy a pack of 2 at Food Lion I tend to use 1 sheet at a time and choose to use a kitchen towel whenever possible to try and save on the paper towels. I do this unconsciously. It’s only looking back that I realize I do this. Now, when there is a pack of 24 rolls in the pantry I find I use way more than before. The notion of oversupply makes us use an item more because we are not held back by the notion of scarcity. Scarcity makes us cautious, but oversupply makes us reckless.

Fast food restaurants are experts at getting people to consume more by how they present their packages. In his book Mindless Eating Brian Wansink goes into great detail how fast food restaurants have many tricks including placing food into one large container instead of many small containers (think KFC bucket of chicken), relabeling drink sizes so that the a lager drink becomes the average. Think if you saw 5 drink sizes ranging from small to king size with large being in the middle. The large then becomes perceived as a medium. Costco also uses these methods as well. Instead of having a pallet that says 3 Jars of Pasta Sauce with the option to take just one, the label simply displays 1 price for a pack of 3 jars that are shrink-wrapped together. A person’s mind perceives that to be 1 unit and not 3 separate units. Same with meats, bread, and produce. Robert Rister notes that “Stockpiled foods tend to go fast, for about a week. But by the end of about a week, we burn out on stockpiled noodle bowls, microwave popcorn, candy, crackers, or fruit bars, and then get so sick of them we let the rest of the purchase go stale”.

So are you really saving money at Costco? Not likely given you end up buying more than you would have had you gone to a normal grocer. Not to mention you are paying a $55 membership fee each year. Yes, you will probably save 30 cents per roll of paper towels but you will use more rolls within a 6 month period resulting in more cost.

But That's Not Me

Great! However, most of us get tricked into feeling good about ourselves by shopping at a place that hypes cheap. Best thing you can do is try and budget what you buy. Create the feeling of scarcity by saying you will only use X amount of paper towel rolls per month, or plan to have spaghetti every other Thursday.

If you still want to shop at Costco I don’t blame you. I will continue to go there, not to save money (I’ve freed myself of holding unto this notion), but to feel awkward about getting free food samples while I am there.